Download PDF (7.6MB) - Wellington Institute of Technology
Download PDF (7.6MB) - Wellington Institute of Technology Download PDF (7.6MB) - Wellington Institute of Technology
Notes to the Financial StatementsGROUP AND PARENT2012 Actual$0002012 Budget$0002011 Actual$00029 COMMITMENTS(a) Capital expenditurecommitmentsBuildings - 5,804Equipment 110 85Hardware 195 35Furniture & fittings 6 64311 5,988(b) Lease commitmentsNon cancellable operating lease commitments are disclosed in note 30 to thefinancial statements.30 LEASES(a) Leasing arrangementsWelTec enters into operating leases for buildings andvehicles:- Building premises are leased for WelTec satellite deliveryoffices in Auckland and Christchurch, and for WelTecdelivery in Wellington city. A number of premises arealso leased around the central Petone campus. Thelength of terms of these leases vary from under 12months to 12 years, with rights to renewal on a numberof contracts.(b) Non-cancellable operating lease paymentsNot longer than 1 year 2,062 1,640Between 1 and 5 years 6,443 3,412Longer than 5 years 3,340 2,04311,845 7,095- Vehicles are leased over 3 - 5 year terms depending onthe type of vehicle concerned.31 CONTINGENT LIABILITIESAs disclosed in Note 14 WelTec is a partner in the Le Cordon Bleu New Zealand Institute Limited Partnership. The Partnership has negotiated a $3m loanfacility with the Bank of New Zealand. The purpose of the loan is to complete the fit-out of the facility and provide working capital. The WelTec Council hasresolved to jointly and severally guarantee the loan with the other New Zealand based partner, Universal College of Learning. Accordingly, WelTec has acontingent liability of $3m at balance date. (2011, $3m).32 FINANCIAL INSTRUMENTS32A Financial instrument categoriesAccounting policies for financial instruments havebeen applied to each class of financial asset andfinancial liability outlined below. The book value ofeach equals their fair value:Loans & receivablesGROUP2012 Actual$000GROUP2011 Actual$000PARENT2012 Actual$000PARENT2011 Actual$000Cash and cash equivalents 8,711 16,214 8,495 16,181Trade and other receivables 7,166 7,215 6,878 7,318Total financial assets 15,877 23,429 15,373 23,499Financial liabilitiesTrade & other payables 5,222 5,314 5,208 5,284Total financial assets 5,222 5,314 5,208 5,28478 | WELLINGTON INSTITUTE OF TECHNOLOGY
32B Financial instrument risksRisk managementStrategic risk management is undertaken by Council through the monitoring of regular risk reports provided by management.These reports highlight potential areas of risk, and the steps that are being followed to ensure the risks are appropriately managed.The Finance department provides treasury management services for WelTec, co-ordinating the access to domestic and international financial markets andmanagement of the financial risks relating to the operations of the business.WelTec does not enter into, or trade financial instruments for speculative purposes.Details of significant accounting policies and methods adopted, including the criteria for recognition, and the basis of measurement applied in respect ofeach class of financial asset, financial liability and equity instrument are disclosed in the Accounting Policies section of these financial statements.Currency riskWelTec has no material exposure to movements in foreign exchange rates. Income sourced from overseas is received in New Zealand dollar equivalents,while trading supplies sourced from international providers are not a material portion of WelTec’s annual expenditure. Council Policy on foreign exchangestates that should an international purchase of $20k or more be required, investigation is made into forward cover. At balance date no forward contracts orany other form of hedging exist.Credit riskCredit risk exposure for WelTec exists principally within cash and cash equivalents, and trade and other receivables balances.Credit risk in respect of cash holdings is managed by spreading short term investment deposits with the major trading banks within New Zealand, whileensuring WelTec receives the best return on the funds invested, as specified by Council Policy. Receivable balances are unsecured. They are stated attheir estimated realisable value after providing for amounts not considered recoverable.The maximum credit exposure for each class of financial instrument is as follows:GROUP 2012 Actual$000GROUP 2011 Actual$000PARENT 2012 Actual$000PARENT 2011 Actual$000Cash and cash equivalents 8,711 16,214 8,495 16,181Trade and other receivables 7,166 7,215 6,878 7,318Total credit risk 15,877 23,429 15,373 23,499The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to Standard and Poor’s credit ratings(if available) or to historical information about counterparty default rates:GROUP 2012 Actual$000GROUP 2011 Actual$000PARENT 2012 Actual$000PARENT 2011 Actual$000Counterparties with credit ratingsCash and cash equivalents AA- rating 8,711 16,214 8,495 16,181Total cash and cash equivalents 8,711 16,214 8,495 16,181Counterparties without credit ratingsTrade and other receivables with nodefaults in the past7,166 7,215 6,878 7,318Total trade and other receivables 7,166 7,215 6,878 7,318Liquidity riskWelTec manages liquidity risk by maintaining adequate reserves to ensure the provision of educational services for the foreseeable future. Thisis completed by continuously monitoring and forecasting cash flows for the medium term. The maximisation of operational inflows and efficientmanagement of operational and investing outflows ensures sufficient cash reserves are maintained.Contractual maturity analysis of financial liabilitiesThe table below analyses financial liabilities into relevant maturity groupings based on the remaining period at the balance date to the contractualmaturity date.2012 ANNUAL REPORT | 79
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Notes to the Financial StatementsGROUP AND PARENT2012 Actual$0002012 Budget$0002011 Actual$00029 COMMITMENTS(a) Capital expenditurecommitmentsBuildings - 5,804Equipment 110 85Hardware 195 35Furniture & fittings 6 64311 5,988(b) Lease commitmentsNon cancellable operating lease commitments are disclosed in note 30 to thefinancial statements.30 LEASES(a) Leasing arrangementsWelTec enters into operating leases for buildings andvehicles:- Building premises are leased for WelTec satellite delivery<strong>of</strong>fices in Auckland and Christchurch, and for WelTecdelivery in <strong>Wellington</strong> city. A number <strong>of</strong> premises arealso leased around the central Petone campus. Thelength <strong>of</strong> terms <strong>of</strong> these leases vary from under 12months to 12 years, with rights to renewal on a number<strong>of</strong> contracts.(b) Non-cancellable operating lease paymentsNot longer than 1 year 2,062 1,640Between 1 and 5 years 6,443 3,412Longer than 5 years 3,340 2,04311,845 7,095- Vehicles are leased over 3 - 5 year terms depending onthe type <strong>of</strong> vehicle concerned.31 CONTINGENT LIABILITIESAs disclosed in Note 14 WelTec is a partner in the Le Cordon Bleu New Zealand <strong>Institute</strong> Limited Partnership. The Partnership has negotiated a $3m loanfacility with the Bank <strong>of</strong> New Zealand. The purpose <strong>of</strong> the loan is to complete the fit-out <strong>of</strong> the facility and provide working capital. The WelTec Council hasresolved to jointly and severally guarantee the loan with the other New Zealand based partner, Universal College <strong>of</strong> Learning. Accordingly, WelTec has acontingent liability <strong>of</strong> $3m at balance date. (2011, $3m).32 FINANCIAL INSTRUMENTS32A Financial instrument categoriesAccounting policies for financial instruments havebeen applied to each class <strong>of</strong> financial asset andfinancial liability outlined below. The book value <strong>of</strong>each equals their fair value:Loans & receivablesGROUP2012 Actual$000GROUP2011 Actual$000PARENT2012 Actual$000PARENT2011 Actual$000Cash and cash equivalents 8,711 16,214 8,495 16,181Trade and other receivables 7,166 7,215 6,878 7,318Total financial assets 15,877 23,429 15,373 23,499Financial liabilitiesTrade & other payables 5,222 5,314 5,208 5,284Total financial assets 5,222 5,314 5,208 5,28478 | WELLINGTON INSTITUTE OF TECHNOLOGY
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